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A new report from the Financial Action Task Force (FATF) follows the money surrounding the integrated criminal business models of scam compounds that are estimated to cause tens of billions of dollars of losses every year.
With scam compounds among the most rapidly expanding forms of organised crime globally, the new report, Combating End-to-End Illicit Financial Flows Linked to Scam Compounds, documents scam compounds or related activity in jurisdictions across Africa, Europe, the Americas and Asia. The report identifies practical approaches to disrupting scam compounds. It maps the financial and non-financial infrastructure on which criminal networks depend, including payment services, virtual assets, technology and telecommunications, to increase global capacity to disrupt criminal activity before victims make payments, as well as after. The most extensively documented scam centre model remains large physical scam compounds. Reports indicate that people from at least 80 jurisdictions have been identified in scam compounds in Southeast Asia, with an estimated 120,000 forced to carry out online scams in Myanmar alone. People trafficked into scam operations may be recruited through fraudulent job offers, transported across borders and subjected to debt bondage, confinement, violence, sexual exploitation, torture and threats. On the other end of the scams, people from more than 100 jurisdictions have been targeted by cyber scam hubs, with victims suffering irrecoverable losses once funds are cashed out, moved offshore or converted into virtual assets. In one case, blockchain analysis mapped more than USD 100 million in victim inflows to a virtual asset wallet cluster attributed to a scam compound, tracing the movement of funds through laundering networks towards cash-out points. Scam compound operators exploit multiple financial channels to move and launder criminal proceeds, including cash, money mule accounts, informal transfer services and virtual assets. The report identifies virtual assets as a central money laundering channel, including cases where dedicated over-the-counter exchange desks operate inside scam compounds to facilitate virtual asset exchange and domestic fund transfers. Instant payment platforms are also exploited, enabling scam-generated funds to be moved from a victims account, sometimes in as little as two minutes. Widespread use of mobile devices, social media, messaging, online platforms and digital financial services is also reported, increasing the reach of scam networks. AI-enabled content, deepfakes and automation are reducing costs for scam networks and helping them scale and speed up their operations, while making it increasingly difficult for victims to identify fraud attempts. The report also finds that enforcement action has prompted scam compound operators to shift towards smaller and more mobile operations, with criminal groups repurposing a wide range of venues to conduct online fraud, including casinos, rented rooms or apartments, coffee shops and moving vehicles. FATF President Giles Thomson said: With criminals weaponising AI and other technologies to intensify their scam operations, we need to urgently modernise and accelerate our response. This means focusing on dismantling the criminal networks behind scam compounds, working proactively with technology, social media and communications sectors to prevent and disrupt more scams before they happen, and quicker intervention to freeze and seize the proceeds of scams once theyve happened. The report finds countries are currently more effective at tackling scam compounds through downstream action, such as targeting victim payments, proceeds, and asset tracing. However, the report calls on countries to combine downstream interventions with upstream disruption that targets the wider criminal infrastructure. By identifying early signals such as fraudulent advertising, recruitment activity, malicious domains and suspicious phone numbers and telecom indicators, fraud can be detected even before a financial transaction occurs. To step up disruption worldwide, the FATF has launched its principles on combating illicit financial flows linked to scam compounds, which include: Target the wider criminal ecosystem: shifting focus from the physical compound to criminal leadership and controllers, recruitment and trafficking networks, and other actors, structures and capabilities that are critical for the scam networks.Disrupt illicit financial flows end-to-end: disrupting the infrastructure and services that enable scams, while also stopping, tracing, freezing and recovering victim payments and generated proceeds before they can be moved or hidden.Connect the networks: information sharing and cooperation between financial institutions, technology companies, telecommunications providers and authorities. Act at speed across borders: the first 24-72 hours after a scam has been detected or reported are critical for freezing funds, recovering assets, and preventing further losses. Put victims at the centre: ensuring investigations prioritise protection of both scam victims and persons trafficked or coerced into scam compounds, ensuring proper safeguards, victim support and reporting mechanisms. Adapt and focus on lasting impact: continuously updating operational approaches as scam operations can decentralise, relocate, rebrand and replace disrupted infrastructure, exploiting AI-enabled social engineering, automation, changing domains and new payment channels. A first step in the FATFs broader anti-fraud roadmap, the report includes almost 120 case studies and good practices, spanning more than 60 jurisdictions, that highlight how collaboration is helping to disrupt scam centre activity around the world: US interagency Scam Centre Strike Forces Disruption Week disrupted approximately 1.4 million social media and email accounts and malicious network infrastructure, supported arrests in Thailand and led to the voluntary freezing of more than USD 3.8 million in virtual assets. Indonesia Anti-Scam Centre blocked over 515 000 accounts and returned approximately USD 10.9 million to victims between November 2024 and May 2026. Covering 85% of the UKs mobile users, the Scam Signal partnership enables banks to receive privacy-preserving mobile-network risk indicators in real time at the point a customer is authorising a payment. Use of the signal has been associated with a 41% reduction in people scammed and a 44% decrease in fraud losses. From now to February 2027, the FATF will be working with the public and private sectors to identify scalable solutions to address cyber-enabled fraud. (ANI)
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